Turkey close to signing €1bn currency swap deal with Azerbaijan

Turkey is close to signing a €1bn ($1.14bn) currency swap deal with Azerbaijan in the coming weeks, two Turkish officials familiar with the issue told Middle East Eye. 

The proposed agreement is one of several currency swap deals that Turkey has made recently to bolster its hard currency reserves.

"The deal is almost ready," a senior Turkish official told MEE. "It is just the bureaucracy that takes time." 

However, unnamed sources speaking to Bloomberg HT said on Thursday that instead of a swap deal, Azerbaijan, would open €1bn worth of deposit account in the Turkish Central Bank. 

Turkey on Wednesday signed a nearly $5bn currency swap agreement with the United Arab Emirates amid a currency crisis that has depleted the Turkish Central Bank’s coffers. 

Turkey is in dire need of financial support amid a record depreciation of the lira against the US dollar, mainly due to Turkish President Recep Tayyip Erdogan's crusade against interest rates.

Excluding swaps and commitments, the Turkish Central Bank’s net international reserves plunged to minus $56bn last month, the lowest on record since 2002, following a string of hard currency sales by the bank to stabilise the lira.

Turkey and Azerbaijan, who share strong political and cultural ties, grew closer during the 2020 war in Nagorno-Karabakh, when Ankara supported Azerbaijani forces take the territory from an Armenian administration.

This story was updated with information on a possible deposit account by Azerbaijan.